Wage growth slows as number of people employed falls

The UK's unemployment growth slowed to 4. 2 percent in the fourth quarter. Official estimates show that the difference between September and November rose by 5% between September to November, despite a dramatic drop in private sector pay increases. According to the Office of National Statistics (ONS), the rate of pay growth for those employed by private companies slowed to the lowest rate in five years. In comparison, public sector employees saw their wages rise, but the ONS said it was likely due to wage increases being distributed earlier than those of the previous year. Meanwhile, the number of people on company payrolls continued to decline, down 135,000 in the three months to November, with a particular decrease in restaurants and hospitality.

This was despite the fact that the economy was still in the midst of a crucial holiday season, when retailers traditionally recruited more pub and shop employees. Average salaries, excluding bonuses, slowed from a four-year high to a 4. 2 percent. 6% rise recorded between August and October. According to Sanjay Raja, Deutsche Bank's chief UK economist, lowering wage growth was very encouraging for interest rates.

I know this seems strange when we say lower wage growth is a good thing,

Raja said on the BBC's Today show.

But, for a Bank of England that is trying to curb inflation, that is fine.

It helps the bank be more confident with the future path in terms of inflation returning to the 2% target. "Inflation, which measures price rises, hit a three-year high. 2% in November, down from 3. 4%. On Wednesday, the ONS will announce results for December. Consumers continue to demand more products and services while paying more for them, and inflation is expected to rise. To combat this, the Bank of England uses higher interest rates, but it can reduce them if the economy is less populated. The Bank of England has cut interest rates six times since August 2024, but more recently in December, when borrowing rates were reduced from 4% to 3. 3%. 75%.

When the rate-setting committee meets in February for the first time this year, economists are strongly expecting the Bank of England to hold borrowing rates in February. The ONS results showed a stark difference between public and private income increases in the three months to November, showing a drastic difference between federal and private wage increases. The average increase in average public sector salaries in the year was 7. 9% compared to 3. 6% for the private sector.

Wage growth in the private sector has slowed to its lowest rate in five years,

Liz McKeown, ONS' director, said, "though public sector wage growth remains robust, reflecting the continuing effects of some wage increases being distributed earlier than they were last year.

The unemployment rate remained at 5. 1% between September and November, the highest level since early 2021, when the UK and the world were still struggling with Covid-19 and lockdowns. The number of individuals on company payroll dropped by 135,000 in comparison to the previous year. According to Chancellor Rachel Reeves' budget announcement in November, a provisional estimate for December showed a 43,000 decrease in payrolls compared to November. However, the ONS cautioned that the December figure should be treated with caution as new data is released. McKeown said the drop in employees on payroll was concentrated in retail and hospitality, which, she said, represented "ongoing poor recruiting activity. The unemployment rate for 16 to 24-year-olds, which is traditionally a large labour pool for bars, restaurants, and shops, remained close to a 10-year high at 15. 9% between September and November.

According to Yael Selfin, chief economist at KPMG UK, the overall unemployment rate could rise in the coming months. "Forward-looking survey results show that employers are continuing to recruit employees, with higher unemployment costs dampening labour demand. The government has raised National Insurance premiums for employees from 13. 8% to 15% of a worker's earnings. It also lowered the threshold at which businesses could start paying the tax on an employee's salary from £9,100 per year to £5,000. The minimum wage has also increased, and it will climb again in April. By expanding the WorkWell program by three years, the government is hoping to assist people into - or returning - to work.

'Confidence'

The scheme helps disabled people and those with health problems access to physiotherapy, education, and workplace improvements. According to WorkWell's Secretary of State Pat McFadden, the WorkWell pilot had helped 25,000 people return or return to work. Gabriel, 23, holds a first-class degree in the performing arts, but finding a career hasn't been straightforward. He has cerebral palsy, which can cause spasms so painful that he can't get out of bed for days at a time. Gabriel spent a month on the WorkWell scheme over the summer, where he received physiotherapy and was given tips on how to thrive at work. He is currently paid to work one day a week at Haringey Shed, a professional arts company.